Silvercorp (SVM) reports the 1Q2020 results

Here are some highlights of the Silvercorp report that was issued 2020.06.23.

Gross revenues are down substantially for the yr ending Mar 31/20 from $170.5 mm 2019 to $158.8 mm 2020.

It’s interesting that the Cost of Sales was flat at $99.4 mm 2020 vs $99.6 mm 2019, almost exactly the same!

Silver head grades were -8% lower Y/Y but Zn and Pb grades were slightly higher Y/Y.

A couple of bigger differences was the ore milling rate of 102.4 K mt2020 vs 159.9 K mt 2019. This was likely due to COVID-19 shutdowns during Quarter. But there might be other reasons operationally in the mine. From the report, there appeared no specific reason given for the production drop-off.

Also, a major impact on revenues was a reduction in Zn and Pb prices yr over yr of Zn $0.51/lb vs $0.75/lb; Pb 0.67/lb vs 0.90/lb. That is a big difference; however, current prices have recovered to Zn $0.917/lb and Pb $0.795/lb. This will help a lot later this fiscal year.

Silvercorp owns about 28% of New Pacific Metals (NUPMF)(NUAG.V) so SVM price is clearly influenced by this ownership. It would be useful to have a breakout of the relative values of the mining operations (DCF analysis), its Working Capital, and the company’s investment in New Pacific ( that would require a valuation of the Bolivian assets).

SVM is presently the safer play since New Pacific relies on one asset in a risker jurisdiction. However, the New Pacific Preliminary Economic Assessment (PEA) is slated for around the end of the calendar year and I look for a quick listing on a major US stock exchange after that, so I continue to add to both positions even though New Pacific is not yet in production.

FD: I hold a combined +10.4% consolidated portfolio position in Silvercorp (5.84%) and New Pacific (4.58%). My cost basis (current price) is US$3.854 (US$5.10) and US$4.077 (US$3.75). I recently started what will be a core position in New Pacific, but may trade out later in the year depending on my assessment of the state of politics in Bolivia. I am in frequent contact with the management of these companies and understand most of their issues, most particularly about Bolivia.

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